Mine bill would slash money for environment

Fiscal Bureau estimates $170 million would be lost annually

Feb. 22, 2013

Written by

Todd Richmond

Associated Press

MADISON — Republicans’ divisive plan to help a mining company open a huge open-pit iron mine in northern Wisconsin would cost the state more than $170 million meant for recycling and environmental protection programs every year, according to new projections.

The legislation is designed to clear the regulatory path for Gogebic Taconite’s plans for a mine just south of Lake Superior. Republicans insist the measure will help create hundreds of jobs in the economically depressed area and thousands more for heavy equipment manufacturers across the state.

Democrats and conservationists insist it would open the door to devastating pollution and ruin one of Wisconsin’s last pristine regions.

Part of the proposal would drastically reduce state fees that mining companies pay for producing waste rock. Mining companies currently pay $7.03 per ton of waste rock. Most of that money goes to help fund local governments’ recycling efforts, pollution abatement, brownfield cleanup and bonds for cleaning up contaminated land.

According to estimates the nonpartisan Legislative Fiscal Bureau released Wednesday, the bill would slash that to a little less than 3 cents, resulting in a loss of up to $171 million annually.

“It’s a free ride for a mining company,” Rep. Fred Clark, D-Baraboo, said Thursday. “It’s part of why so many people object to the bill just on economic grounds.”

Under the legislation, mining companies’ only obligation to the state for waste materials would be a 1-cent per ton environmental repair fee, a 1-cent per ton groundwater fee and a 0.7-cent per ton fee for the Waste Facility Siting Board, an arm of the governor’s office that facilitates talks between landfill license applicants and municipalities. Mining companies wouldn’t have to pay a recycling fee, which is currently $7 per ton.

The bureau’s report, released Wednesday, notes that Gogebic Taconite expects to extract about 8 million long tons of iron annually over the mine’s 35-year first phase; a long ton is 2,240 pounds. The bureau said that would lead to about 29 million tons of waste per year, including 18 million tons of tailings, the crushed ore waste left over from processing iron pellets, and 11 million tons of overlying rock.

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Based on those numbers and the legislation’s 2.7 cents per ton fee, the state could generate between $665,000 and $785,000 a year that would be divided between the environmental management account and the waste board.

If Gogebic Taconite had to pay the $7 recycling fee, the state would generate more than $172 million for environmental cleanup and pollution abatement, the bureau said.

The bill’s author, Sen. Tom Tiffany, said Thursday that it doesn’t make sense to retain the $7 recycling fee since Gogebic Taconite plans to use the waste to fill the pit when the mine closes.

“This is not a recyclable material,” said Tiffany, R-Hazelhurst. “The waste rock … will be used in the reclamation. That’s the rationale.”

Gogebic Taconite President Bill Williams said the recycling fee was intended to cover trash deposited in a landfill and shouldn’t apply to rock.

“I think that would be a deal breaker for anybody,” Williams said. “You put it in and no industry will come.”

Larry MacDonald, mayor of Bayfield, a city of roughly 500 people on Lake Superior about 50 miles north of the mine site, said the bill could lead to pollution that could harm the city’s lake-dependent tourism industry. He said exempting Gogebic Taconite from the recycling fee is ridiculous.

“The fact we’d lose $171 million is an atrocious thing,” he said. “That’s throwing the baby out with the bath water.”

Clark, the Baraboo lawmaker, is co-sponsoring an alternative mining bill that also would eliminate the $7 recycling fee on waste. But the Democrat said that bill is better because it imposes a so-called tonnage tax, which would require mining companies to pay according to how much iron they extract. Seventy percent of the revenue would go to local governments near the mine; 30 percent would go to the state.

Tiffany’s bill would impose a tax on mining companies’ revenue, giving 60 percent of the money to local governments and 40 percent to the state after the locals are compensated for mining impacts.

Democrats contend the tax might not generate anything if Gogebic Taconite has a down year. The tax doesn’t kick in until a company makes at least $536,600, and companies are allowed to deduct operational costs. Democrats say the tonnage tax is guaranteed money if the company extracts anything.

The fiscal bureau prepared the estimates for the Legislature’s budget committee, which is scheduled to vote Monday on the bill. Approval would clear the way for a full vote in the Senate and Assembly.

Passage is all but certain. Republicans control both legislative houses and Republican Gov. Scott Walker has touted the mining bill as the GOP’s signature job creation plan.